Private equity firm Allegro Funds won’t answer questions about Harris Scarfe administration
Allegro Funds is remaining tight-lipped about why it put Harris Scarfe into administration days after taking control of it.
SA Business
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Allegro Funds has refused to answer questions about why it placed Harris Scarfe into administration less than a month after buying it.
Workers were stunned on Wednesday when customers told them the business had been placed in administration, less than a month after Sydney-based Allegro bought it from former owner Greenlit Brands.
Management later called staff in to formally brief them on the situation.
After failing to get a response to phone calls on Wednesday, The Advertiser emailed Allegro founding partner Chester Moynihan to ask him:
WAS Harris Scarfe profitable in the last financial year?
WHEN buying the company did you intend to run it? If so, what changed in the days since the transaction went through?
HOW much does the company owe its creditors?
Allegro responded through a lobbying firm to say it had no comment.
Deloitte, which has been appointed as the receiver of Harris Scarfe, told The Advertiser that while parts of the business were profitable, overall it was not.
“Overall, the business has been loss-making, but parts of the business have also been profitable,’’ a spokesman said.
“Ultimately, the voluntary administrators (BDO) will report to creditors as part of their investigations into the financial performance of the business.’’
Neither Deloitte nor Allegro have released details about how much debt the company owes.
Allegro was not identified in Deloitte’s press release as being the entity which placed Harris Scarfe in administration, but a search of company documents by The Advertiser showed this to be the case.
Mr Moynihan was quoted by The Australian as saying Allegro, which specialises in business turnarounds, bought the business with good intentions.
“It was part of a group of assets that we bought and suffice to say we bought it with the best of intentions,’’ he said.
“But when you own these businesses essentially sometimes you have to make the hard decisions, and it was a business that before we bought it had a series of challenges.”
“(Former owner) Greenlit wanted to get rid of or get out of their general merchandise division; they wanted to focus on their furniture division and so the deal for us was here, you can’t cherry pick, it’s kind of a package deal.’’
Allegro picked up other brands such as Best & Less in the deal with Greenlit, which was announced in mid-November.
Gerard Dwyer, national secretary of the SDA union that represents workers at Harris Scarfe, told The Australian he was deeply concerned at the news.
Mr Dwyer said the SDA would file a dispute with the Fair Work Commission over the company’s failure to consult with the SDA prior to this announcement.
It has been another torrid year for retailers, with fellow Adelaide-based firm Ed Harry failing in January, with the loss of more than 100 jobs in SA, while nationally online footwear trailblazer Shoes of Prey also met its demise in March.
The Westpac-Melbourne Institute consumer sentiment index released this week showed confidence had dropped again and was sitting at 95.1, where 100 is neutral.